The Federal Reserve's latest "Beige Book", a summary of the state of US business across the central bank's 12 regional districts published on Wednesday, featured an explosion in references to import tariffs as American firms estimated the impact of the Trump administration's newest trade policies.
The words "tariff" or "tariffs" appeared 36 times in the 32-page Beige Book report, compared with 20 references in total from all of the reports compiled over the past two decades, according to a review of archived material on the Fed's website.
Tariffs have never been referenced more than twice in a single Beige Book going back to October 1996, the furthest back the Fed catalogues the full reports on its site.
The words have now appeared 40 times in the Beige Book since Republican Donald Trump became president in January 2017. Under his predecessor, Democrat Barack Obama, they were mentioned just twice.
Tariffs made 14 appearances in Beige Books issued during Republican George W. Bush's term. Bush imposed tariffs on imported steel in the spring of 2002 and lifted them at the end of 2003, and most of the references to duties appeared around that period.
In all, in the latest Beige Book, tariffs were raised by business contacts in 10 of the Fed's 12 districts, with only the reports from the Federal Reserve banks of New York and St. Louis omitting a reference.
In many instances, they were referenced in connection with the 25 percent duties on imported steel and aluminium announced in March, but some contacts raised concerns about the wider list of proposed imports targeted by the White House earlier this month.
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The following are the passages from the newest Beige Book attributed to business contacts in Fed districts around the country:
BOSTON:
"In general, respondents were optimistic in their outlook. However, two contacts brought up the proposed China tariffs and said they represent a major risk. One was a toy manufacturer who sources 75 percent of their production from China. The second said that punitive tariffs on Chinese aluminium had already had a big effect: 'Thin gauge foil' is produced only in China and tariffs raised the price three-fold; the contact argued that 'these tariffs are now killing high-paying American manufacturing jobs and businesses.'"
PHILADELPHIA:
"Of the 22 manufacturing firms that offered general comments, seven mentioned impacts from recent tariffs or proposed tariffs - most noted rising prices or anticipated rising prices; just one firm anticipated greater demand."
"According to contacts, recently imposed tariffs have accelerated price appreciation of steel products, in some cases at double-digit rates."
CLEVELAND:
"One steel manufacturer mentioned that customers are attempting to stock up as prices rise because of increased demand and tariffs on primary metals imports."
"Rising freight volumes across product segments were attributed primarily to solid economic growth. There is concern about the sustainability of increasing volume because of newly enacted tariffs and potential outcomes from NAFTA negotiations."
RICHMOND:
"Prices grew moderately, on balance; however, steel and aluminium prices rose sharply and were expected to rise further as a result of recently-imposed tariffs."
"Steel and aluminium prices rose sharply and were expected to rise further as a result of recently-imposed tariffs."
"(A) Virginia display case manufacturer reported stockpiling steel in anticipation of higher prices resulting from the new tariffs."
"Several ports noted some uncertainty about what effects the steel tariffs might have on trade."
ATLANTA:
"Most firms noted that most non-labor input cost pressures were muted, though some noted increases related to the threat of tariffs."
"Overall, businesses continued to report relatively benign input-cost pressures. However, some contacts noted rising prices for transportation, as well as steel as tariff rhetoric increased. The Atlanta Fed's Business Inflation Expectations survey showed year-over-year unit costs were up 1.9 percent in March. Looking ahead, survey respondents indicated that they expect unit costs to rise 2.1 percent over the next twelve months."
CHICAGO:
"Income prospects for the agricultural sector improved a bit, in spite of concerns about the impact of Chinese tariffs."
"Manufacturers facing higher steel and aluminium costs because of the new tariffs expected to pass on about half of the increased costs to their customers on average."
"Steel imports spiked in anticipation of the 25 percent tariff imposed in late March."
MINNEAPOLIS:
"Multiple contacts reported dramatic increases in the prices for steel products, partly attributable to recently announced tariffs; a manufacturer of tractor trailers said they 'can't raise prices as fast as material costs.'"
KANSAS City:
"The majority of contacts (in the energy sector) said potential steel and aluminium tariffs would have a low-to-medium impact on their drilling costs, and several have already experienced moderate increases in the cost of steel."
DALLAS:
"Outlooks, while still optimistic, have become more uncertain due to new tariffs and trade concerns."
"Price pressures remained elevated over the past six weeks. Input cost pressures increased among energy, manufacturing, and construction firms, partly due to the announced tariffs on steel and aluminium. Upstream energy firms said the steel tariffs represent a worry, although some contacts said there shouldn't be much of an impact on costs until 2019 when contracts roll over. Downstream energy contacts were still figuring out how much of their steel is subject to the new tariff and how that will affect their costs and investment decisions.
"Several manufacturers said that talk of steel tariffs immediately resulted in higher steel prices. An architecture firm noted that the increase in steel costs will impact the ability of their clients to move forward with some construction projects."
"Expectations regarding future business conditions remained optimistic, although several contacts noted that the newly enacted tariffs were creating a lot of uncertainty in their outlooks for activity and prices. Refiners and petrochemical producers specifically mentioned their views about the potential negative impact of these tariffs on construction projects."
"Outlooks rose slightly over the past six weeks, although uncertainty surrounding trade policies and the new tariffs negatively impacted some (non-financial services) firms' expectations."
"Some contacts (in the financial services sector) mentioned optimism in the market due to tax reform, while others noted uncertainty about how new tariffs will impact Texas businesses."
SAN FRANCISCO:
"Contacts reported a jump in inflationary pressures for metals prices, partly due to the anticipation of tariffs and unrelated increases in raw material costs."